We recently attended the launch of a new book by our good friend and colleague Jeremy Streten of Streten Masons Lawyers.

The Business Legal Lifecycle is based on Jeremy’s extensive experience advising business owners on how to protect their interests as they build a successful business. Written in plain English, with minimal legal jargon and plenty of real world examples, this Australian handbook is a must-have for any business owner.

Licensed restaurants have been the target of a number of OLGR initiatives over the years, and the most recent change, effective from 1 July 2015, will see the introduction of some of the toughest rules yet. Aimed at any restaurant trading as a bar, licensees will be required to comply with principal activity requirements for each trading day.

What does this mean for restaurant licensees?

Up until the mid-1990s a restaurant, or on premises meals, liquor licence restricted the supply of liquor to in association with a meal and some operators may remember ensuring patrons were intending to dine before serving a drink. However, since then the principal activity, or what used to be the primary purpose, provision of meals prepared, and served to be eaten, on the licensed premises has been used as an assessment of compliance. In effect, if a restaurant could demonstrate it was generally maintaining its principal activity, there was no limit on the amount of liquor that could be sold not in association with a meal.

The upcoming changes, part of the Safe Night Out Legislation Amendment Bill 2014, will tighten things up by requiring restaurant licensees to comply with principal activity requirements on the basis of each trading day. In other words, if a number of patrons attend for a drink and not a meal, there must have been enough dining patrons throughout that one day to ensure that most patrons consumed a meal on premises.

The concerns about these changes are obvious according to Liquor & Gaming Specialists Director Matthew Jones. Licensees will be expected to monitor the number of patrons consuming meals and the number not doing so. How will a busy restaurant owner, who sells numerous coffees and other beverages, ensure that these patrons do not outnumber, or even equate to, the number of patrons consuming meals?

Other changes, which will perhaps affect fewer restaurants, include the winding back of extended trading hours. From July 1, all existing and new restaurants will be limited to 1 am trading, regardless of any current approval. There are whispers that this reduction in available hours will include a reduction in the annual licence fee uplift, but this is yet to be confirmed.

For the more seriously impacted licensees, strategies to mitigate the effects include changing licence types: bar, caf and commercial hotel licences are the likely alternatives. For the rest, it looks like yet another compliance headache.

The lockout laws introduced in Kings Cross in late February this year have been heralded as a success, with numbers of violent assaults dropping by half since the introduction of the laws. The changes in crime rates after adopting similar lockout laws for Newcastle, over a substantially longer period of 5 years, averaged at a 30% reduction in crime. While both of these areas seem to reflect positive changes in behaviour caused, or at least influenced, by restrictions on late-night trading of bars and hotels, the statistics lose much of their effect when viewed alongside the crime rates of other areas in New South Wales. In the same period in the similar-sized cities of Penrith, Wollongong, Sutherland Shire and Gosford, similar or greater reductions in crime rates were recorded, despite the absence of any similar lockout provisions for liquor establishments; suggesting lockouts don’t work as the provisions in Newcastle had little effect in bringing down the rates of violent crimes.

With little demonstrable direct impact on the rates of violent behaviour, the negative effects of the lockout laws may outweigh the supposed benefits that they bring. The economic impact of reduced trading hours is a cause of concern for many business owners and the reduced activity of Sydney’s iconic nightlife precincts threatens the city’s tourism sector.

Further issues with the lockout provisions could be that rather than promoting responsible drinking habits, the restrictions encourage patrons to drink more in a shorter time period, or simply travel to locations unaffected by the legislation. NSW Assistant Commissioner Mark Murdoch admitted to the ABC that the new rules could “just move the crowds and violence elsewhere” . Peter Miller, Principal Research Fellow at Deakin University, also acknowledged the potential for the implementation of restrictions in some areas to simply move problems to other areas, which may not be as well-equipped to deal with them.

Patrons have regularly been shown to travel across the Queensland border for the increased trading hours offered by northern NSW venues, and Gold Coast Mayor Tom Tate has already vocalised his ambition to capitalise on NSW’s restrictions, hoping to tempt NSW patrons across the border and turn the Gold Coast into “Australia’s Las Vegas”. Thus while it may appear that crime rates decrease in areas affected by the lockout provisions, it may simply be that the violence has been relocated to another area. Logically, this increased congregation of patrons in an area may lead to increased levels of alcohol-fuelled violence, with crowding at licensed venues identified as a leading propagator of violent activity.

Conversely, decreases in the level of patronage of a given precinct will logically reduce the number of incidents in that area. Statistics on the reduction in patron numbers since the introduction of the lockout in Sydney don’t appear to receive the same attention in the media as those relating to decreases in violent behaviour. The reality appears to be that since the O’Farrell crackdown, crowds have deserted the Cross by up to 30%, with other anecdotal reports depicting the desertion of previously renowned nightlife spots.

Identified instigators and catalysts of alcohol-related violence include diverse factors such as personal biology, type of liquor consumed, characteristic of the licensed premises and surrounds and the culture of the community1. With the lockout provisions focusing on just one of the multitude of factors shown to increase the chances of violent activity, it can only be said that the provisions are a poor attempt to remedy a much larger social problem. A number of owners and managers of licensed venues throughout NSW attribute the general decrease in violent behaviour they have witnessed to their habit of self-policing; adopting strategies ranging from providing free water and food for patrons and limiting the types of drinks they sell after a certain time .

What is needed is not a wide-reaching ban on the sale of liquor, but more targeted attempts to change the behaviour of both managers of licensed venues and “high-risk” patrons. This could be achieved with a mix of increased education and awareness of alcohol-related violence, and incentives for operators of licensed venues to self-regulate and adopt responsible behaviour, with punishment reserved for offenders and for those who do not or cannot sufficiently manage patron violence.

Much has been said recently about Brisbane being regarding by Lonely Planet as “arguably Australia’s hippest city”, an “energetic river town on the way up, with an edgy arts scene, pumping nightlife and great coffee and restaurants”. My 4 year old pointed out to me just the other day the number of cranes in and around the CBD. I tell him that’s Cranky the Crane, Kevin the Crane and Collin the Crane; then I run out of names from the Island of Sodor to label the many others. But, there are clearly plenty of developers attracted to Brisbane at the moment and, with them, the hospitality businesses wanting to have a go.

Mixed use multi-level developments create a broad range of licensing possibilities. Typically, the developer will finish construction of the building and then seek tenants for the ground level shops. The tenant usually has to apply for their own liquor licence to suit their business such as restaurant, cafe or small bar.

However, what many don’t realise is that it is possible for the landowner to obtain liquor licences for each tenancy off the plan, without a sod being turned. For example, a proposed development might contain four tenancies on its ground floor level. The owner can obtain separate liquor licences for each of those proposed tenancies in her/his name and then transfer the licences to the respective tenants. This makes the tenancies more marketable, making it easier to secure restaurant, cafe and small bar operators as the process of transferring a liquor licence is much quicker and cheaper than applying for the licence from scratch. This means there is much less uncertainty for the tenant associated with obtaining a new licence in time for opening.

Another advantage with obtaining multiple licences at once is the economies achieved by use of the same information and material as much of it will be identical for each tenancy. This also makes it easier to pass on the cost of obtaining the liquor licence to the tenant. Not only do they benefit from being licensed sooner, they also get the licence for less money and with minimal input from them.

Over the years, we have found this to be a successful strategy for developers. Of course, there’s nothing so lonesome, morbid or drear, than to stand at a built bar ready to go with no beer. And, empty shops mean income is both slim and dusty for landlords. So securing licences early means a more attractive development and ultimately a win-win situation for owners and tenants.